Tax cuts, the chancellor Jeremy Hunt has made clear, are not on the table as an option for boosting growth. Fierce arguments rage over how strong the link is between taxes and the up-or-down state of the economy.
How, then, to get market and consumer confidence, and investment, going? The Treasury needs to look not at our finances, but our laws. Specifically, its economists should be worrying about legal certainty and stability in our economy.
Contributors to today’s Gazette feature on ‘levelling up’ were quite clear – what would really unlock developer and investment confidence is legal certainty on planning law. Instead, there have been three different strategies set out in as many years. As Cripps lawyer Nicole Cameron told the Gazette: ‘Housebuilders like certainty. Economic growth by housebuilding was one of the government’s stated aims.’
Instead, law reform prospects blow back and forth with the political wind.
A lack of legal certainty is also at the core of the problem many businesses see with the Retained EU Law (Revocation and Reform) Bill. As Law Society president Lubna Shuja points out, the bill ‘raises uncomfortable questions for parliamentary sovereignty, legal certainty, and the rule of law’.
Legal certainty, where we can provide it, is part of this country’s ‘soft power’ in the world. And it is the kind of soft power that can be turned into hard cash. If English law is chosen as the governing law for business contracts, the City benefits from deals being done here, and from disputes that arise heading here.
The case was well made at an event last week held at Allen & Overy and sponsored by the Law Society. Former A&O partner Philip Wood, who has just published a book on governing law, puts English law ahead of competitor jurisdictions. Why? Well, he looked at 13 areas of comparison, and predictability emerged as key.
Former commercial and appeal courts judge Dame Elizabeth Gloster, a discussion panellist at the event, agreed. ‘Predictability and certain outcomes’, she said, were the most important features of English law for commercial parties in dispute.
The Retained EU Law Bill goes against such lessons, and holds out the prospect of chaos. No one knows what, of swathes of EU-derived law, will stay or go.
Legal and regulatory certainty drive all sorts of things. They can determine the location of a business; its investment in people, plant and research; and, because they affect risk, the terms of the financing and credit businesses can get.
In the absence of such certainties, the decisions that might have driven growth get postponed.
We need greater stability, quality and certainty in our law-making. In the absence of that stability and certainty, other inducements to stay, invest and grow need to be much larger to work.
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